A Reminder of the Threat to Doctors; Why Doctors Should Protect Their Assets

A ruling this week by the Illinois Supreme Court illustrates the challenges faced by doctors due to uncapped damages on malpractice claims and rising insurance rates. In Lebron v. Gottlieb Memorial Hospital, the Illinois court struck down the state’s Medical Malpractice Reform Act. That law placed caps on malpractice awards for pain and suffering.

The Wall Street Journal reports that prior to the Medical Malpractice Reform Act, damages against doctors grew by more than 247%, while Chicago doctors saw insurance premiums rise 10 to 12% a year. Following a trend in other states with runaway litigation against doctors, physicians left Illinois for other states, resulting in fewer doctors to treat patients, especially in rural areas.

The Illinois malpractice law, passed in 2005, corrected this. Medical malpractice lawsuits declined by 25%. Doctors remained in local practice.

The situation is not particular to Illinois, and doctors throughout the country are effected. Plaintiffs lawyers have initiated challenges to medical malpractice reform in Texas, Wisconsin, Indiana, Florida, Maryland and Georgia. Courts in Maryland, Utah, Alaska, Colorado and Nebraska have issued rulings opposite to Illinois. The judicial landscape of medical malpractice is inconsistent across the country, further challenging doctors, especially in the context of health care reform far from certain on the federal level.

What is clear is that doctors must protect their assets from aggressive litigants and plaintiffs lawyers. Asset protection allows doctors to maintain reasonable levels of liability insurance. In the event that a patient is in fact injured, he can be compensated, but unable to go after the doctor’s personal assets to satisfy an unreasonable judgment. Asset protection is most effective when implemented prophylactically, before the patient’s lawsuit, rather than as a reaction to the lawsuit. Doctors who plan ahead can feel secure that their personal assets are protected from all future threats.